Monthly Archives: March 2023

According to Law360, A Maryland lawyer cannot be granted innocent spouse relief to avoid paying taxes on $227,000 of unreported income, partly because she should have known her husband was embezzling from a church where he was the finance director, the U.S. Tax Court said.

Kelli Hunter Reynolds had a duty to ask questions about additional checks from National City Christian Church that appeared in the couple's joint bank accounts in amounts similar to wages paid to her husband as part of his $95,000 salary, the court said. The couple didn't report those additional amounts for tax years 2004 to 2007, according to the opinion.

That Reynolds did not notice a discrepancy between the balances in their accounts and the amount they reported to the Internal Revenue Service, even though she spent money from the accounts and had legal training, disqualified her from claiming relief for not knowing about the underreporting, the Tax Court said.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

 

Read more at: Tax Times blog

We have been advising that the IRS is criminally prosecuting taxpayers for failing to pay withholding taxes since October 29, 2019 when we posted The IRS is Now Criminally Prosecuting Employers For Failure To Pay Withheld Payroll Taxes! where we discussed that the IRS is stepping up criminally prosecuting business owners for failing to turn over withheld payroll taxes.

The latest criminal prosecution, according to DoJ, is of a Michigan business owner who was sentenced to 12 months and one day in prison for failing to collect and pay over to the IRS employment taxes withheld from his employees’ wages on March 15, 2023.

According to court documents and statements made in court, Yigal Ziv of West Bloomfield owned and operated Multinational Technologies, Inc. (MTI), a software development firm based in Walled Lake. 

Ziv was responsible for filing MTI’s quarterly employment tax returns and collecting and paying to the IRS payroll taxes withheld from employees’ wages. 

From the first quarter of 2014 through the first quarter of 2018, Ziv collected approximately $691,000 in employment taxes from MTI’s employees, but did not file employment tax returns or pay the withheld taxes to the IRS. Even after learning of the IRS’s ongoing criminal investigation in May 2018, Ziv did not file MTI’s employment tax returns from the fourth quarter of 2019 through the fourth quarter of 2020 and did not pay the IRS approximately $199,000 in payroll taxes withheld from MTI’s employees. 

During that same period, Ziv directed MTI to spend hundreds of thousands of dollars for his personal benefit, including home mortgage payments, luxury auto lease payments and department store purchases. In total, Ziv caused a tax loss to the IRS of $1,169,000.

In addition to the term of imprisonment, U.S. District Judge David M. Lawson for the Eastern District of Michigan ordered Ziv to serve one year of supervised release and to pay a $5,000 fine and $897,271.80 in restitution to the United States.

 Thinking of Borrowing From Your Company's

You Better Thank Again, if You Like Your Freedom!

for a FREE Tax HELP Contact Us at:

www.TaxAid.com or www.OVDPLaw.com 

or Toll Free at 888-8TaxAid

Read more at: Tax Times blog

According to Procedurally Taxing,   in Polish Lottery Winner’s Son Sues Over Penalties For Failing To Report Foreign Gifts They discussed Wrzesinski v US. where the matter involved penalties under Section 6039F for failing to file Form 3520, the Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.

Krzysztof Wrzesinski emigrated to the US from Poland in 2005 at the age of 19. About five years later his mom, who still lived in Poland, won the Polish lottery. She took the proceeds and made gifts to Krzysztof of $830,000 over the course of 2010 and 2011.

While the proceeds were excluded from gross income, Krzysztof was hit with penalties in the amount of $87,500.00 and $120,000.00 for 2010 and 2011. Appeals abated much of those, but not about $45,000.

Krzysztof’s Tax Return Preparer Told Him (ADVICE) That He Need Not File Any Forms With His Tax Returns And That The Gift Proceeds Were Exempt From Gross Income.

Last week DOJ has filed a status report indicating that it has conceded, and that Krzysztof will be receiving a refund in a couple of months. 

Hat tip to Dan Price, who, in a post on Linked In, reasonably suggests that he hopes the concession will lead “IRS to acknowledge reasonable cause in more foreign gift penalty cases”.

Read more at: Tax Times blog

The IRS Office of Chief Counsel detailed in a memorandum published March 10, 2023 a scenario in which a controlled foreign corporation's midyear distribution of previously taxed earnings and profits to its U.S. owner would not be recognized as a gain.

The foreign entity's owner, a domestic corporation, is described in the memo as having included in its own gross income for the year Subpart F income and global intangible low-taxed income allocated to the foreign corporation.

Partway through the year, according to the memo, the foreign corporation distributes an amount equal to the Subpart F income and GILTI in the form of a dividend to its U.S. parent.

Under Internal Revenue Code Section 961(B)(1) And Subsection 1.961-2(C), The U.S. Entity Would Not Recognize A Gain On The Distribution, The Internal Revenue Service Said.

The adjusted basis of its stock in the foreign business would increase at first because of the U.S. company's inclusion of foreign income, but would then decrease due to the dividend, according to the memo.

Have A CFC or Sub F Tax Problem?

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Read more at: Tax Times blog